Nepali Times
Strictly Business
Leapfrogging to nowhere


Why is the phone service such a scarce resource in Nepal? Fifty-five years after the first exchange system was set up, the state-owned telecom authority has been able to hand out only about 450,000 lines in this country of 25 million. Despite technological advancements that have made expenses fall worldwide, it still costs, on an average, about $ 75 to get one fixed-line phone-that too, after waiting for two to 10 years.

In fact, so pent-up was the demand that in just five years since the state first introduced mobile telephony in 2000, almost 250,000 new numbers have been distributed, at the ratio of 2.3 pre-paid lines for every post-paid connection. But the benefits of even that mediocre achievement were overshadowed when the state abruptly snatched away the right to use mobile phones six months ago. Though fixed-line connections have been restored since, the bureaucratic hurdles for reviving old mobile lines or getting new ones have gone up, more so outside of Kathmandu. As of today, almost 175,000 pre-paid mobile lines remain dead, ostensibly for security reasons.

Despite such measures, it is not clear to what extent the state has succeeded in destroying the rebels' communication apparatus. Instead, what is increasingly clear is that by punishing ordinary subscribers, it has alienated many small businesses for whom the mobile-with an installation charge that was one-fifth of a fixed-line-was a handy tool to earn money by staying in touch with customers and information networks. Far from fueling Maoist insurgency, the mobile phones in Nepal were seen as, to borrow the words of The Economist of London, 'a classic example of technology that helps people help themselves'.

Indeed, in a paper published last March, Leonard Waverman and colleagues at the London Business School make a case that 'investment in telecoms in developing countries generates a growth dividend because the spread of telecommunications reduces cost of interaction, and expands market boundaries and information flows'. Using data from 102 low and middle-income countries, including Nepal, they calculate that, all else being equal, 10 additional mobile phones per 100 people boost the GDP growth by 0.59 percent.

Their research concluded that 'mobile telephony has a significant impact on economic growth and this impact may be twice as large in developing countries compared to developed countries'. That Africa has had the world's fastest growing mobile market in the last five years despite its well-publicised poverty must tell us that the poor are more likely to value how important it is to stay connected to information flows.

In Nepal, geography remains hostile. The continuing war has partitioned people into isolated pockets in the hills. Road networks were sparse to begin with, but have become even more dangerous because of landmines and ambushes. Ropeway transports and postal facilities remain primitive. To add insult to injury, the state has handicapped the only two inexpensive and easy-to-spread voice-based technologies-FM radios and pre-paid mobile connections- that can leapfrog over the usual obstacles to deliver critical information to people who need it. Could the state have done anything more stupid than to allow information degenerate into rumors and heresies?

These days, when millions of vegetable farmers in Bangladesh and pan-wallahs in India can afford to choose services from different and competitive phone companies, phones remain a needlessly scarce resource in Nepal. Why? Because the state controls who gets the lines and who doesn't. And because the state doesn't want citizens to stay connected, to share information and to help one another to be productive and aware Nepalis.

(11 JAN 2013 - 17 JAN 2013)